A Louder Blast from Japan'sWhistle-Blowers

The country's corporate tipsters grow bolder

September 2, 2002, 12:00 AM EDT

At age 27, Hiroaki Kushioka was on the fast track at Tonami Transportation Co., a shipper in his hometown of Toyama on Japan's west coast. After graduating from Meiji University, one of the country's best, he had returned to Toyama to join Tonami. Just three years later, Kushioka won a coveted post as assistant manager, an encouraging sign that he was in line for a top corporate slot.

It was his first promotion--and his last. Now, four years short of retirement, the 55-year-old Kushioka is still serving out what he calls a "corporate death sentence" for a breach of code. His crime? Ratting on his employer for price-fixing. Kushioka went to Yomiuri, Japan's largest newspaper, with details of a rigged-pricing system after his bosses turned a deaf ear to his complaints. The resulting scandal was front-page news in 1974, triggering a probe by the watchdog Fair Trade Commission and a pledge by the industry to reform its opaque pricing. "It seemed like the right thing to do, but I was too young to understand the consequences," says Kushioka. "I became a pariah." Co-workers, friends, and family members turned their backs on him--and advised him to resign in disgrace. Kushioka's mother was so ashamed that she urged his wife to leave him. (She didn't.)

Under similar circumstances today, Kushioka might have a different story to tell. In the past two years, whistle-blowers have proliferated in Japan--and have been welcomed by society as never before. Mitsubishi Motors Corp. is still reeling from the disclosure by an unidentified tipster in mid-2000 that it covered up product defects for more than 30 years. The company has since recalled 1.4 million cars, but Japanese consumers have largely shunned the brand. And in May, an insider spilled the beans on Duskin Co., which holds the Mister Donut franchise license in Japan. The anonymous informant forced the company to admit it had sold pork buns made with a banned additive. With sales falling, Mister Donut franchisees are now demanding the ouster of senior Duskin executives.

Emboldened by these recent whistle-blowers, Kushioka is filing suit against Tonami. In a case he hopes will help others avoid punishment for speaking out, he is demanding a formal apology and $375,000 in compensation for mental abuse and lost wages. The lawsuit claims that Tonami execs berated Kushioka, demoted him, hired thugs to threaten his life, and then shunted him off to the side when he refused to quit. His duties went from overseeing important accounts to dusting cushions. "I wore a scarlet letter," he says.

Tonami doesn't deny that Kushioka was passed over for promotions for years on end, but it dismisses his lawsuit as sour grapes from a disgruntled employee. "It's hard for us to comment on 30-year-old complaints," says spokesman Yasuhiro Saegusa. "But it seems clear his career path has more to do with a lack of ability and managerial skills than anything else."

Legal experts say Kushioka has little chance of winning his lawsuit, but he says he hopes it will inspire more whistle-blowers to come forward. If they do, though, few are likely to reveal their names. Says Robert M. "Skipp" Orr, an expert on Japanese culture and now president of Boeing Co.'s operations in Japan: "There's still a potential for mura-hachibu"--a Japanese term for ostracism dating from feudal times.

Unlike in the U.S., there's no financial incentive for whistle-blowers. Publishers don't offer them book contracts, and the government doesn't encourage them with financial rewards. Nor is there much to prevent retribution. While Prime Minister Junichiro Koizumi's government supports bolstering protections by tweaking existing laws, his Liberal Democratic Party opposes a proposed bill that would explicitly forbid punishing government whistle-blowers.

Japan's business community isn't particularly keen on such measures, either. Business leaders fear that protecting whistle-blowers could undermine the corporate chain of command and encourage phony complaints from angry workers. "There's a knee-jerk reaction that there ought to be a law, but it goes against free-market principles," says Yoshikazu Miyabe, a former chairman of Mitsubishi Plastics Inc. who sits on a government corporate-ethics committee. "We don't want Japan to turn into a nation of snitches."

Kushioka's supporters think a nation of snitches would be just fine if that's what it takes to reform Japan's closed business culture. He has become a poster boy for Japanese civic groups working to improve corporate accountability. "Kushioka-san's bravery is a source of inspiration for us all," says Hiroko Mizuhara, secretary-general of the Consumers' Union of Japan, a Tokyo consumer-rights group.

Inspiring, maybe, but going Kushioka's route can be dangerous. Tamaki Mitsui, a former official in the Osaka public prosecutor's office, was arrested on bribery-related charges on Apr. 22--just before a scheduled television appearance in which he planned to air allegations that prosecutors routinely misused state funds. On July 30, Mitsui pleaded not guilty to the charges. Similarly, Yoichi Mizutani, president of a warehousing company in Kobe, says he is unfairly under the microscope after exposing shenanigans at Snow Brand Food Co., a unit of Japan's largest dairy. In January, Mizutani revealed that Snow Brand had falsely labeled imported beef as domestic in order to qualify for subsidies. As a result, the food company shut down in April. Now, Mizutani is in trouble for refusing to agree to snap inventory inspections at his 65-year-old company. While he doesn't have any proof that he is being harassed because of his action against Snow Brand, he says the government is sending the wrong signal to whistle-blowers. "I'm being made an example of for ruffling the feathers of a corporate giant," Mizutani says.

Even that treatment is a far cry from the response to Kushioka's indiscretion. Within months of confessing to his boss that he leaked word of the pricing cartel, Kushioka was transferred to an isolated office in Toyama, where he worked alone in a small room with no phone. With no formal duties, he spent his days reading or taking care of chores such as shoveling snow and weeding. As co-workers went on to senior posts, Kushioka wasn't even issued business cards, a crucial prop for any Asian business executive.

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Being identified as an informant is a lonely honor. Still, Kushioka doesn't regret having come forward all those years ago: Not to have done so, he says, might have led to an internal witch hunt. But the graying corporate warrior hopes that good Samaritans today don't endure the type of hazing he went through. That seems less likely, now that lifetime employment is fading. So regardless of whether Kushioka gets an apology, it's clear that Japan Inc. can no longer rely on a code of silence among its legions of salarymen.